In 2014, Harvard University graduate Ryan Williams chose to step away from his promising career with Blackstone to pursue his passion for leveling the playing field when it comes to real estate investing. He began to build what he calls the next-generation leading real estate investment platform focused on enabling individuals and larger institutions to directly invest in yield-oriented commercial real estate. In this episode, Ryan breaks down the plan he has for Cadre and how the platform will soon allow anyone with $100 to spare to invest in real estate:
The plan will roll out in two phases.
Phase 1: Cadre establishes its position as the leading platform for individuals to invest in. Ryan says they are working on accomplishing this by building a track record. They plan on going head to head with some of the largest private equity funds in the world and proving themselves as the ideal capital partner for the most talented, experienced operators, as well as the best platform with the most sophisticated institutional investors.
Phase 2: The second phase is when Cadre will open up access to a much wider range of individuals, including retail investors. Retail investors, Ryan says, are any individual or group of individuals with at least $100 of capital that they’re looking to invest outside of the equity or the stock market. Phase 2 also entails opening Cadre’s operator base up to any qualifying operating partner who has the desire to raise money and scale their business.
Timing the Transition
Cadre is currently limited to accredited investors only. Ryan says this will change, hopefully within the next 18 months. “The reason why we’re still focused on limiting the platform to accredited investors is because I firmly believe once we go down to the retail investor market and open up to any individual, I want to go from a place of credibility and trust,” Ryan says. “I want the experience to be incredible.”
How the Deals Will Be Structured
Ryan says all of the deals they’ve done to date are JVs where Cadre essentially operates as the syndicator. They partner with operators, and they are very selective — Cadre only approves about 1% of the deals they see. The future customer and investor base, just like the current investor base, will be able to invest either directly as an LP in one of these single-asset funds or JVs, or alternatively, in a portfolio fund product that Cadre will be launching, which will allow investors to get diversified access across 15–20 properties.
Ryan Williams | Real Estate Background
- Founder and CEO of Cadre, a commercial real estate investment platform.
- Portfolio: $3.5 billion of properties across the United States spanning office buildings, multifamily developments, industrial, and hospitality.
- Based in: New York, NY
- Say hi to him at:
- Twitter: @RyanAWms, @CadreRE
- LinkedIn: Ryan Williams, Cadre
- Best Ever Book: The Untethered Soul by Michael Singer
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Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I'm Slocomb Reed and I am here with Ryan Williams. Ryan is joining us from New York City. He's the founder and CEO of CADRE, a commercial real estate investment platform. Over $4.5 billion in value of property has been invested in through the platform across the United States, spanning office buildings, multi-family developments, industrial, and hospitality. Ryan, can you start us off with a little more of your background or what you're currently focused on?
Ryan Williams: Yeah, definitely. I appreciate you having me on. I founded CADRE in 2014 and I found the CADRE really on a personal pain point, which was that it was challenging to invest in high-quality, yield-oriented commercial real estate. I'm from Baton Rouge, Louisiana originally; I didn't grow up around real estate ownership. It was always a pipe dream for me, in many ways... But I was fortunate enough to start getting involved in certain circles and networks where I saw that access to this asset class was not unattainable. The first network where I saw that in the case was my college, Harvard. Harvard was also a pipe dream for a while, but based on my entrepreneurial experiences and some mentors who said "shoot for the stars", I applied and got in. After the culture shock, I really went to work outside the classroom.
The first business venture I started was a business venture that was focused on empowering undergraduates to understand real estate, because I knew that most people didn't know we had a lot of resources there. The second venture is started was a real estate venture, basically buying single-family homes during the subprime credit crisis in Atlanta, Georgia.
My roommate from college is from Atlanta, I visited him, and noticed there were all these foreclosed homes up and down the street. We didn't have any money, but we had some classmates who did, a lot more liquid and wealthy than we were. I've always been fearless so we said, "Maybe we should try to start scooping up some of these homes", but investing in them in a way that would actually help sustain the community. Renting them back out to folks who otherwise would be foreclosed on. Long story short is that business ended up scaling pretty nicely and we ended up returning a good amount of capital to the investors.
By the time I had graduated a couple of years after school, we owned more than 1,000 residential units throughout the Atlanta metro area. Keep in mind, this is my night job. My day job was doing investment banking at Goldman Sachs. Ultimately, I caught the eye of Blackstone in 2012, because they were just about to launch their own single-family business. They reached out to me, I ended up joining their firm, ended up working, and really saw a ton of incredible opportunities there, especially across the spectrum of real estate.
That was the first time in terms of that network where I saw commercial real estate as an incredibly lucrative asset class based off the investments we were making. So multifamily, industrial, office, hotel... And I saw so much money, so much wealth being created. But when I looked at who it was being created for, I was kind of surprised that it was being created for a really small part of our global economy, the ultra, ultra-high net worth investors. So with that realization in mind, I could have kept doing what I was doing, making good money, or followed my heart and passion, which is really about leveling the playing field and building a business that would democratize and unlock access to asset classes like real estate. Then I chose the latter, and in 2014, I decided to set out on my own to build what I believe would be the next generation leading real estate investment platform, focused on enabling individuals and larger institutions to directly invest in yield-oriented commercial real estate, that would give them protection against inflation, which we're seeing today, that would give them the ability to generate returns that would outpace the equity markets, and diversification, especially when there's unparalleled and unprecedented volatility in the stock market and crypto market.
It was really, again, about bringing the institutions, folks that I worked for and worked with, in line with the individuals, letting more people invest. We've been able to build a digital platform where people can log in, invest in either individual deal-by-deal buildings that our team of experts screens and underwrites, or invest in a portfolio of real estate that we'll curate for them.
So the idea of CADRE was born out of a pain point I saw, and a recognition that I thought it should be more accessible for the average individual to invest. We're fortunate and grateful that we're just getting started on the mission, despite the strong track record we've built to date.
Slocomb Reed: Awesome. Clearly, a very impressive background, Ryan. I'm sure you hear that often. There are a couple of things going into the how and the why of you founding CADRE that I'm interested in diving into. You spoke specifically about leveling the playing field of commercial real estate investing, but investing in general, and that being one of the reasons that you founded CADRE. Is CADRE qualified as a crowdfunding platform? Is it the right terminology?
Ryan Williams: We don't consider ourselves a crowdfunding platform, largely because today, the vast majority of our owner-operator base are what I would consider more institutional in nature, so to speak. The individual investors that have invested with us are at least accredited investors, but the vast majority are qualified purchasers, and even more, our institutions - think about endowments, like Harvard University, think about foundations, JPB, MacArthur, others like that. And then on the supply side, so where we get our deals from, those are operators, developers who have worked with large funds. But CADRE is a much more flexible, much more agile, and progressive source of capital.
Now, I say all that to say, phase one of our business is CADRE establishes its position as the leading platform for individuals to invest in. How do we go about doing that? We go about doing that by building a track record, proving ourselves with the most "sophisticated" part of the market. Proving ourselves going head-to-head with some of the largest private equity funds in the world, prove ourselves as the ideal capital partner for the most talented experienced operators, and as the best platform for the most sophisticated "institutional investors." That's phase one.
Phase two is CADRE opening up access to a much wider range of individuals, retail customers, and anybody who wants to invest can then invest. It's also opening our network of deal flow, our operator base up to any qualifying operating partner who has a desire to raise money and scale their business. Maybe he's a little bit smaller than our average equity check.
But I've been really focused on that two-phased approach, largely because I think it's the right way, ultimately, to go down-market to a kind of '"crowdfunding-type" ecosystem. To go that way I think the is the best way. because you're going there with the tech infrastructure already built, so you can actually support an amazing user experience.
Imagine a world where you're an individual, you're somebody who grew up in my hometown of Baton Rouge, Louisiana, you don't have a lot of capital, just like I didn't have a lot of money growing up, but you can now invest alongside the largest endowment in the world on our platform in a frictionless way, with the click of a few buttons. No one can offer that, and that's what we want to be able to do.
Slocomb Reed: Let's talk a little bit more about that. One of the things that you said was that in phase two you're looking to attract retail investors. That's a term that I've heard used many more times than I have heard it defined. How do you define retail investors?
Ryan Williams: Yeah. I define a retail investor as any individual or group of individuals, we'll say, who has at least $100 capital that they're looking to invest outside the equity or stock market. So pretty much anybody who has some ability to aggregate disposable income of $100 plus or minus.
Slocomb Reed: Ryan, you were saying earlier that getting into phase two was leading you to the ability to have retail investors invest with CADRE. And you said a retail investor is anybody with basically any liquid up $100 or more. Are you there already? Do you have those retail investors? Or are you currently limited to accredited investors?
Ryan Williams: We have the demand. If we wanted to turn on the faucet, so to speak, and start opening up access tomorrow, we could. But we have limited and focused our platform to accredited investors only today. Now, that will change. If I told you exactly when that change, it would be breaking news. But I would bet you that if we were sitting here 18 months from now it will have changed, and retail customers will have been able to invest at scale, because we're working on some innovative products.
But the reason why we're still focused on limiting the platform to accredited investors is that I firmly believe once we go down to the retail investor market or open up to any individual, I want to go from a place of credibility, from trust, I want the experience to be incredible. When I started the business, what I saw was that there were a lot of "crowdfunding" websites that were out there. And I love the mission of democratization, I love the access opening up, that's core to me.
Slocomb Reed: Ryan, I want to talk specifically to the Best Ever listeners who feel the same call to make the real estate investing opportunities that you and I can now take for granted available to anyone with the $100 that you were talking about before. For those of us who want to do something similar, or do the same thing, how is it that you make that transition? Let me back off of that question for a second and just recognize that it is much easier to raise capital if you limit yourself to accredited investors. That's the way that the SEC has set the rules of the game. How is it that you make that transition to non-accredited retail investors, and making the same opportunities available to them that are typically only limited to accredited investors?
Ryan Williams: First, marketing. Make it clear that you can invest for as little as $100 to $200. We haven't done that today; we just hired a CMO for that purpose, so we can educate folks. The second is structure. I think the third is engagement reporting, making sure people understand what they own, how they own it, and the like. And I'll add a fourth, which is liquidity. So the other thing that we've done that no one else in the space has done, is built the industry's first secondary market; so now people can actually get liquidity on our platform sooner than they otherwise would if they were to invest in traditional real estate funds, if they even had access, or frankly, if they were to invest in club deals.
Slocomb Reed: So to make sure I understand what you're talking about with the secondary market... I invest in a deal on CADRE, I can then sell my --would you call them shares-- so I can sell my shares in that deal on the secondary market?
Ryan Williams: To other CADRE buyers as well. Yeah, that's the right way to think about it.
Slocomb Reed: Gotcha. Ryan, when it comes to marketing, and engagement, out of the four items that you've just mentioned, there's already a lot of podcasts and other thought leadership content on that. Specific to how you package investment opportunities so that it makes sense for you to make up opportunities available to people who are only investing hundreds of dollars, or a few thousand dollars, how is it that you structure that opportunity so that it is sustainable for you with the amount of logistics and paperwork involved and the number of investors that you have to take on to buy commercial real estate when people are only investing hundreds of thousands of dollars? Do you have to have a massive scale before it makes sense to do that?
Ryan Williams: You need scale before it makes sense to do that is what I believe. I want to say massive scale. The reason I say a massive scale is because I think if you can develop technology, you can generate leverage for end-to-end automation of reporting, investing without needing to massive scale. That's what I spent the last eight years doing. We have an in-house technology team, more than 40 product managers, engineers, and designers, and what they've developed is what I consider a modern software stack for commercial real estate investment management. Everything from document signing to funding of capital, to reporting, to our secondary market, has been automated. As a result, we don't need to hire armies of people to support that kind of scale. But we still do need good volume, because there's a reality to the economics, which is why we started our business at the top, so to speak, of the investing market, where we were able to get larger folks on earlier.
Break: [00:16:34] - [00:18:20]
Slocomb Reed: When you get to the point that you're making these opportunities available to retail investors, what are those opportunities going to look like? The primary point of comparison for our Best Ever listeners, Ryan, is the apartment syndication, where you have general partners putting a deal together, structuring it in such a way that limited partners have a preferred return. It's underwritten to a three to seven-year hold with a disposition at the end, and the majority of the profits coming from the sale going back to limited partners. How are the deals structured that will be made available to retail investors?
Ryan Williams: Not dissimilar. All of the deals we've done to date are JVs, where we are effectively the syndicator, if you will. We partner with operators, we have a network of more than 400, we work with 40 or so to date. We only approve 1% of the deals we see. And our future customer and investor base, just like our current investor base, will be able to invest either directly as an LP in one of these single asset funds or JVs. Or alternatively, in a portfolio fund product that we'll be launching, where they can get diversified access across 15 to 20 or so of these properties.
But there'll be a similar kind of preferred return, similar promote. As I mentioned, historically, our returns have been a little bit less than 20%, but we'll likely target low to mid double-digit type returns on a net IRR basis, and generally close to a 2X net multiple is what we've targeted, which is also where we've historically performed around.
Slocomb Reed: Ryan, for the Best Ever listeners who have thought about doing what you're doing, not necessarily exactly the same way, but building a business to the scale of yours with over $4.5 billion in value of properties that have been invested in through your platform, and creating a platform that is large enough that it can create opportunities for non-accredited investors, one of the questions I often ask as an owner-operator when I'm looking at apartments syndications and GPS is --not to put this the wrong way-- but where is the money for the GP? Because coming from the owner-operator buy and hold standpoint, I buy, I get the cash flow, I get the appreciation. When I sell, all the money as mine. So if I were going to GP a deal of bringing limited partners and give them really juicy returns, how is it that I make money as the GP? I wish I had a more sophisticated way to ask this question, Ryan, but building it to the scale that you have, if I wanted to do the same thing, where would the profitability be for me? Is this the kind of thing that takes many years of acquisitions, deal structuring, and then dispositions before I'm going to see any proceeds for myself? Or is this the kind of thing that is more... I think you know what I'm trying to ask you, Ryan.
Ryan Williams: I get it. Yeah, sure. So what I would say is that this is a marathon, it's not a sprint. It's not a long marathon, it's a fast-paced marathon. I've been very upfront with all of my corporate investors and backers, Ford Foundation, Andreessen Horowitz, General Catalyst, Thrive etc. that this is a business that overnight is not going to be returning massive profits. The reason is that because, one, the main revenue source for our business are fees, so upfront fees, asset management fees - those grow and compound; just the rules and laws of compounding, as we scale our asset base. The second big revenue stream for us is promote and carry. We don't charge a separate 2 and 20, which is a big benefit to our end investors, because there's no double promoting our model. But whenever an individual property is sold, we do get profits. But that can take three, four, five, six years. So the answer to the question of, as the GP owner of the business itself, how do I think about profits and how long it takes - in my mind, it's going to take close to where we are today, eight years or so of growth to get to a point where the business is profitable, where the AUM, assets under management, support, from a revenue perspective, profitability... And it'll take a few additional positive exits, which we'll be announcing shortly, where we return money. I can redistribute some of those profits to our team as well. But again, it's a fast-paced marathon rather, or a long sprint, if you will.
Slocomb Reed: Gotcha. This may be an assumption that most of our Best Ever listeners have, but I still want to ask... Ryan, you've scaled quickly, and scaling quickly as a business owner, founder, and CEO, in your case, is expensive. Let me make some assumptions, and then please affirm them where they're right, correct me where I'm wrong. When I say scaling is expensive, what I mean is that it sounds like the kind of operation where in order to reach the scale that you have in the last eight years, basically all if not almost all of the revenue that CADRE is generating is getting reinvested in its own infrastructure.
Thinking from the perspective of someone who would want to build the next CADRE - is that the expectation that someone needs to have? ...is that if you want to scale as quickly as CADRE has, you're going to have to reinvest as much as you possibly can in the business. This is not something that's going to provide a great lifestyle for you upfront... You see what I'm saying?
Ryan Williams: Yeah. What I would tell you is that if you want to build CADRE, if you want to replicate what we're building and replicate what our vision is, then it is going to take more than eight years to do; if you want to scale a business without the vision, and the vision that I have is to improve every single individual's, credit or non-accredited, personal financial future by making real estate as accessible as any equity that they can invest on any platform today... It's an ambitious vision, for sure. That means you need to create infrastructure, so you can reach every single individual in the world, every member of our global economy. So that's the aspiration and the vision. Plus, you want to make sure you can continue to grow, and it's a decade-type investment and experience. That's because technology, which is a key part of what we do, is just as key as real estate. It's hard to build, it's hard to get right, it's hard to create the infrastructure, and it’s hard to create a cohesive organization where you have the same level of talent on the real estate side as the technology side.
We're reinvesting almost every dollar that we generate back into the business so we can scale further and faster. But yeah, the expectation should be that it's going to take a while. Lifestyle is not for the faint of heart, but I wouldn't really want to do anything else than build this business.
Slocomb Reed: I had a similar conversation with a newbie investor that I met at the Best Ever meetup group that I host here at Cincinnati.
Ryan Williams: Oh, really?
Slocomb Reed: Yeah. About finding the hard work most people aren't willing to do, that you love, that brings you joy, and that's where success comes from.
Ryan Williams: That's exactly right. I agree with that one.
Slocomb Reed: Yeah, right. I'm excited for CADRE. I love your vision and your mission, and that's one of the reasons I have the questions that I do, Ryan... I, and I know a lot of our Best Ever listeners have similar desires. We are trying to find ways, possibly similar to CADRE, possibly different, to do similar things and make the investing opportunities that we've discovered through reading books, getting into podcasts, meeting people like you, like Joe Fairless. I know that there are a lot of people who have similar motivations.
I'm hoping those people are listening to this episode, and taking notes on this conversation, and recognizing that it is possible to make these kinds of opportunities available. And hopefully find ways, maybe not necessarily to replicate CADRE, but find other ways to do the same thing. The investor who can only put together $100 at a time, and needs to get a return, and needs to build for a future - those people ought to have more opportunities. It's awesome that you're working on creating those, Ryan. Are you ready for our Best Ever lightning round?
Ryan Williams: Let's do it.
Slocomb Reed: Awesome. What is the Best Ever book you've recently read?
Ryan Williams: The best book I've recently read, I would say, is the Untethered Soul. I know it sounds a bit philosophical, and that's because it is. But it's one of the Best Ever books I read (Michael Singer), because I think what it helped illustrate for me is to get real inner freedom you have to observe your problems, you can't get lost in them.
Slocomb Reed: Awesome. What is your Best Ever way to give back?
Ryan Williams: Time, guidance, experience, advice. I've had so many people get back to me, and at times, the only thing you can't get more of at the end of the day.
Slocomb Reed: Through the experience of building CADRE, what is the Best Ever skill you've developed?
Ryan Williams: Being a true listener. Listening until the other person on the other side of the table has fully finished their thought or statement.
Slocomb Reed: And what is your best advice?
Ryan Williams: Best Ever advice is output is never greater than input. You've highlighted it before, but everyone sees all the nice, again, fortune of success and "wins". They don't see what goes into it behind the veneer of these things looking so glorified. But what it takes to put in to something like CADRE is much more than what, frankly, I'll get out of it, just given the work and the inertia with building and scaling it.
Slocomb Reed: Last question, Ryan. Where can people get in touch with you?
Ryan Williams: The best way to get in touch with me is by email. I made it easy enough, so that I can respond, email@example.com or go to cadre.com. We pride ourselves on being incredibly responsive. But yeah, I'd love to figure out a way to create a syndicate of Best Ever real estate investing listeners, create my own little CADRE, and maybe there's a way for us to do that down the line as well. But firstname.lastname@example.org is my email.
Slocomb Reed: Yeah, links to your email and website will be in the show notes as well. Ryan, thank you and Best Ever listeners thank you as well. If you've gotten value from this episode, please do subscribe to our show, leave us a five-star review, and share this with a friend who has similar desires and motivations to Ryan's in mind. Thank you and have a Best Ever day.
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